DoD waging 'continuing war' on unproductive acquisition bureaucracy

Jared Serbu, DoD reporter, Federal News Radio

DoD acquisition leaders are making the rounds in and outside Washington, explaining the latest iteration of their blueprint for improvement: Better Buying Power. As they do, they're telling members of industry that they're sensitive to their concerns about a growing oversight bureaucracy.

One of the tenets of Better Buying Power 2.0, the version leaders are rolling out right now, is a carryover from the original version: reducing nonproductive processes and bureaucracy in the acquisition process. Officials said many of those non-value-added processes are in the area of contract oversight.

Deputy Secretary of Defense Ashton Carter

"I share industry's concerns about an excessive oversight culture," said Ashton Carter, the deputy secretary of Defense. "I've long been concerned that the number of watchers in the department is approaching the number of doers. We may in fact be reaching that threshold, especially with respect to things like audits. We're trying to work internally and work with industry to address these issues."

Carter, who used to serve as DoD's undersecretary for acquisition, logistics and technology, spoke Thursday at the Center for Strategic and International Studies alongside Frank Kendall, who now holds that job. Kendall said an overemphasis on compliance and oversight in the acquisition process isn't just a burden on the defense industry, it's a problem for DoD's own managers too.

"I'm waging a continuing war against non-value added activities. It's a harder fight than you might imagine," he said. "A lot of this is about internal processes. I once had a conversation with one of our program executives who told me that when he had a multi-year program, he was more effective than he had ever been in his career, because all he had to do was work on his program to get more for the money. I took that to heart. The burden we put on our people to come report to us for oversight reasons, while it may not cost that much and it may not delay programs that much, it does take managers away from things that they should be doing. So we're going to start tracking this. We're going to start tracking how much time our people spend giving briefings to the staff and getting coordinations just to work their way through he process, and then go attack the things we can push back on."

Figuring out what's working

The effort to gather data on how much time managers spend being overseen rather than working on their programs is consonant with other parts of Better Buying Power. As the department implements the latest round of acquisition improvement, Kendall said he's in the midst of a much more comprehensive effort to assemble information about what's working and what's not across the massive defense acquisition enterprise.

"I have a sign outside my door that says, 'In God we trust, all others must bring data.' It's because we need to look in the mirror and see how we're actually doing," he said. "I used to ask audiences of acquisition people, 'Can anybody tell me how well we're doing today compared to how we were doing 10 or 15 years ago?' Nobody ever knows the answer. I think it's time we started measuring. If you don't know where you are, it's kind of hard to figure out where you want to go."

Kendall said starting soon, he plans to distribute an annual study that attempts to tell the department where it is on acquisition matters, what approaches are failing and which ones are working well. He said the study is asking a number of questions.

"A good example is fixed-price contracting. Does it get you better results or not? The answer is it depends," he said. "Do some kinds of products seem to inherently have poorer results? The answer is yes. C3I [Command, control, communications and intelligence] programs don't do very well, for example. We'll look at industry as well. Are some firms consistently better at delivering products as they promised than others? Do some of the military services or buying commands do better? And this is not about pointing fingers or blaming people, it's about understanding what works so that others can emulate that and do it. I'm trying to get this into a format I like so I can get it out to everybody and think about, because it's going to be very thought-provoking."

One data point the department already has and is giving it some cause for optimism is the cost of acquisition programs. Last week, the Pentagon delivered its latest mandated report on cost growth in acquisition programs to Congress, known as the Selected Acquisition Report. One of that report's functions is to notify Congress of any programs that have significantly exceeded their previously-projected costs, known as Nunn-McCurdy breaches. Kendall said for the first time in his memory, there were no breaches at all in the latest update.

Borrowing from industry

One of the experiments Kendall wants to try in the effort to drive unneeded bureaucracy out of acquisition programs would be modeled after Lockheed's Skunkworks program for advanced weapons system development beginning in the middle of the last century. He envisions two teams of highly competent project staff, one from government and one from industry, both able to work relatively autonomously.

"That team is empowered, and there's a fair amount of trust involved in the organization that does that. That's a little different from the way we do business today," he said. "I've asked each of the services that they would like to take that kind of approach with, and what I would do is relieve them of many of the formal documentation requirements and the staffing that goes along with that, and simplify the process enormously so we can focus on the substance of what's being done. To have this work, I need an assurance that both sides will have truly professional teams, that the requirements are well-defined, and that those teams will work together. Where you get trust in an arrangement like this is in that understanding where both sides know what's the right thing to do to get the product tested and fielded, where nobody's worried about the other guy doing something that doesn't need to be done. So I think this is an experiment worth trying."

But Carter and Kendall say even as they try new ideas to buy products and services more efficiently, they're working at cross purposes with sequestration, which they say demands the department take actions that are inherently inefficient.

Carter said DoD is trying to blunt that impact through its current strategic choices and management review, which will plan for a variety of budget scenarios.

"I hope that one of the principal benefits of the review for our acquisition programs will be to bound the uncertainty that we currently face," he said. "Uncertainty is anathema to good management, for us, and also for our partners in industry. It discourages investment, it causes the hoarding of capital, it prevents the natural rationalization of the industrial base and it harms growth."

Kendall said it also makes it impossible for the department to make up-front investments to save long-term money, or to do long-term planning.

"I get a list every week of the things we're doing because of sequestration. Some of the things, like the Blue Angels not being able to fly, aren't the end of the world," he said. "But if I can't repair the runway, I have an increased risk of [foreign object debris] damaging our planes. If I can't buy any furniture to put into the building I just paid for, I have to stay in leased space longer. If I can't do the maintenance on my major end items, if my units aren't training, these things add up. We're just taking a huge number of inefficient actions. All of our investment accounts are coming down to less economic quantities. All of our research and development profiles are being stretched out so that we carry more overhead for a longer time. All of this is the opposite of what I'm trying to accomplish. That's going on, and that water keeps rising. I've used the word devastating before, and I'm not going to back down from that."